Accouting Final
The cost of energy consumed in producing good units in the Canning Department of Mandarin Orange Processing Company was $15,790 and $9,670 for March and April, respectively. The number of equivalent units produced in March and April was 84,000 and 47,000 liters, respectively. What is the cost of energy for the 2 months?
$0.19 and $0.21 for March and April, respectively
Given the following costs and activities for Falcon Company's electrical costs, use the high-low method to compute Falcon's variable electrical costs per machine hour. Costs Machine Hours April $3,570 $17,000 May $2,800 $10,000 June $4,340 $21,000
$0.14 per unit
Divisional income from operations should be compared
over time to a budget.
The capital expenditures budget summarizes the
plans for acquiring fixed assets.
Under the product cost concept, which costs are included in the cost amount per unit?
Only the costs of manufacturing the product
The __________ is the amount of cash needed today to yield a series of equal net cash flows at fixed intervals in the future.
present value of an annuity
The ratio of income from operations to sales is referred to as
profit margin.
Common approaches to setting transfer prices include all of the following EXCEPT the
residual income approach.
Unit contribution margin is
sales price per unit less variable cost per unit.
Standard amounts budgeted are determined by multiplying the standard costs per unit by __________ production.
the planned
In a cost-volume-profit graph,
the sales line is plotted by beginning at zero on the left corner of the graph.
When a company has a production bottleneck, it should use __________ to determine how to maximize its profits.
the unit contribution margin per production bottleneck constraint
Planning for capital expenditures is necessary for all of the following reasons EXCEPT
to evaluate amounts spent for office equipment that may be immaterial.
When actual hours exceed standard hours, the result is a(n)
unfavorable direct labor time variance.
Service department costs are allocated to profit centers based on
usage of the service by the profit center.
__________ is a measure of the relative mix of a business's variable costs and fixed costs, computed as contribution margin divided by income from operations.
Operating leverage
When using capital rationing, unfunded proposals
may be reconsidered if funds later become available.
The __________ recognizes that a dollar today is worth more than a dollar tomorrow because today's dollar can earn interest.
use average rate of return; use differential analysis
If a company uses standard costs to record its inventory in the general ledger, what would the journal entry be if the direct materials price variance is favorable?
Materials Dr. (at standard), Direct Materials Price Variance Cr., Accounts Payable Cr.
Developing the annual budget
usually begins several months prior to the end of the current year.
Variable costs for Oswego Company are 40% of sales, and sales are $450,000. Fixed costs are $104,000. What is the income from operations?
$166,000 (third highest #)
The budgeted finished goods inventory and cost of goods sold for a manufacturing company for Year 1 are as follows: January 1 finished goods, $988,000; December 31 finished goods, $472,000; cost of goods sold for the year, $2,575,000. The budgeted cost of goods manufactured for the year is
$2,059,000.
Use the following information to determine direct materials cost per unit: total direct materials costs are $154,800, fixed costs are $93,600, and units produced are 18,000.
$8.6
Direct Labor Rate Variance =
(Actual Rate per Hour - Standard Rate per Hour) × Actual Hours.
In the manufacture of 15,000 units of a product, direct materials cost incurred was $150,700, direct labor cost incurred was $88,000, and applied factory overhead was $52,500. What are the total conversion costs?
140,500
Relatively speaking, if operating leverage is high, then the percentage impact on income from operations from a change in sales
Large
Which of the following statements regarding static and flexible budgets is NOT true?
A hospital typically would use a static budget for hotel room expenses.
The cost of production report may include all of the following EXCEPT
Advertising costs.
Which of the following costs can be used in the cost approach to transfer pricing?
All of these choices are correct
Managers can use which of the following cost-plus methods to determine selling prices?
All of these choices are correct.
Standards are set by
All of these choices are correct.
The budgeted income statement includes estimates for
All of these choices are correct.
The capital expenditures budget should be integrated with
All of these choices are correct.
Which of the following is a reason why cost behavior is useful to managers?
All of these choices are correct.
One of the ways that cost-volume-profit analysis can be used is
Analyzing the effect of changes in selling price on profit.
Which of the following is NOT a way in which process and job order cost systems are similar?
Both must compute equivalent units to determine per-unit costs.
Factory Overhead Rate =
Budgeted Factory Overhead at Normal Productive Capacity ÷ Normal Productive Capacity.
Which of the following budgets is NOT part of the cost of goods sold budget?
Capital expenditures budget
Which of the following is a method of analyzing capital investment proposals that ignores present value?
Cash payback method
Step 2 in preparing the cost of production report is
Compute equivalent units of production.
Contribution margin ratio is
Contribution margin divided by sales.
The examination of the relationships among selling prices, sales and production volume, costs, expenses, and profit is
Cost-volume-profit analysis.
During the production process, costs are transferred from Blue Company's Mixing Department to its Packaging Department. The journal entry for the transfer includes
Credit to Work in Process--Mixing
Which of the following statements regarding decentralized operations is true?
Managers in decentralized operations often work closely with customers.
Which of the following measures would NOT help managers to control and improve operations?
Marketing plan
Step 3 in preparing the cost of production report is
Determine the cost per equivalent unit.
Step 1 in preparing the cost of production report is
Determine the units to be assigned costs.
Which of the following would LEAST likely be used to allocate factory overhead when activity-based costing is employed?
Direct labor costs
The correct formula for average rate of return is
Estimated Average Annual Income ÷ Average Investment.
The formula for budgeted revenue is
Expected Sales Volume × Expected Unit Sales Price.
When materials are requisitioned and transferred in, all of the following accounts may be included in the journal entry EXCEPT
Finished Goods.
Costs that are constant in total as the level of activity changes are called __________ costs.
Fixed
The correct formula for break-even point is
Fixed Costs ÷ Unit Contribution Margin.
A company with a small contribution margin ratio might implement which of the following business strategies?
Focus attention on reducing costs
When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing
Goal conflict.
Budgeting affects all of the following managerial functions EXCEPT
Hiring.
The interest rate used in net present value analysis is referred to as the
Hurdle Rate
Which of the following is a present value method of analyzing capital investment proposals?
Internal rate of return
Which of the following is an advantage of the cash payback method?
It analyzes cash flows.
Which of the following is NOT an advantage of the internal rate of return method?
It assumes that the cash received from a proposal can be reinvested at the internal rate of return.
Which of the following statements regarding "what if" or sensitivity analysis is NOT true?
It directs managers to the perfect selling price.
Of these two cost flow assumptions, __________ and __________, __________ is the same as the physical flow of units through the production process.
LIFO; FIFO; FIFO
Under activity-based costing, which of the following should be used to allocate the cost of the Purchasing Department?
Number of purchase orders
The standards for direct materials, direct labor, and factory overhead are separated into which of the following two components?
Price and quantity
Which of the following would NOT be considered a service department?
Production department
The break-even point is where
Revenues = Costs.
Which of the following is NOT a benefit of using a computerized budgeting system?
Such systems require more employees to be involved in the process.
Which of the following is NOT an example of a cost that varies in total as the number of units produced changes?
Supervisor salary
Which of the following is a disadvantage of using the average rate of return?
The average rate of return method does not consider the timing of the expected cash flows.
In a process cost system, the amount of work in process inventory at the end of a period is valued by summing
The costs remaining in each department account at the end of the period.
Equivalent units of production are
The portion of whole units that are completed with respect to materials or conversion costs.
__________ is a manufacturing strategy that focuses on reducing the influence of bottlenecks on production processes.
The theory of constraints
Which of the following conditions would cause the break-even point to decrease?
Total fixed costs decrease.
Which of the following conditions would cause the break-even point to decrease?
Unit variable cost decreases.
Which of the following conditions would cause the break-even point to increase?
Unit variable cost increases.
Which of the following statements regarding activity-based costing is NOT true?
Using an inappropriate factory overhead allocation method often still leads to accurate product costs.
Which of the following statements about the reporting of variances is NOT true?
Variances are reported to external financial statement users.
Guardino Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $105,000, $127,000, and $155,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $63,000, and $74,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $80,000, and work in process at the end of the period totaled $63,000.The journal entry for the flow of costs into Department 1 during the period for factory overhead is
Work in Process—Department 1; 74,000 Dr. and Factory Overhead—Department 1; 74,000 Cr.
Guardino Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $104,000, $127,000, and $155,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $51,000, $64,000, and $73,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $76,000, and work in process at the end of the period totaled $64,000.The journal entry for the flow of costs into Department 2 during the period for direct labor is
Work in Process—Department 2; 64,000 Dr. and Wages Payable 64,000 Cr.
The method of developing budget estimates that requires managers to estimate sales, production, and other operating data as though operations are being started for the first time is __________ budgeting.
Zero-based
The budget performance report received by the plant manager would be
a summary of all the departments under his or her responsibility.
The __________ variance is the difference between the actual variable overhead costs and the budgeted variable overhead for actual production.
a. variable factory overhead controllable
Standards are used in the control function to compare
actual performance against the budget
A centralized business is one in which
all major planning and operating decisions are made by top management.
Step 4 in preparing the cost of production report is
allocate costs to units transferred out and partially completed units.
Underapplied factory overhead represents
an unfavorable total factory overhead cost variance.
Target profit
can be computed by modifying the break-even equation.
The process by which management allocates funds among competing capital investment proposals is known as
capital rationing.
The __________ is the expected period of time between the date of an investment and the recovery in cash of the amount invested.
cash payback period
Under target costing, costs can be reduced in a variety of ways including all of the following EXCEPT
changing the sales level.
The process of interest earning interest is called
compounding.
Contribution margin is
computed as sales minus variable costs.
An investment center has responsibility for
costs, revenues, and investments.
The unit contribution margin can be __________ when a company has a production bottleneck.
misleading
One major objective in setting standards is to
motivate employees to achieve efficient operations.
Standards that can be attained with reasonable effort are called __________ standards.
normal
The cost price approach for transfer pricing will likely fail when the operations are
decentralized and are either profit or investment centers.
Capital investment evaluation methods can be grouped into methods that __________ and methods that __________.
do not use present values; use present values
According to the lean manufacturing philosophy,
employees should be cross-trained for multiple functions.
A manager in a cost center has responsibility for all of the following EXCEPT
fixed assets.
Standard costs may be used as a management tool to control costs by
including standard costs and variances in the general ledger and monitoring costs separately.
Understanding cost behavior depends on all of the following EXCEPT
intangibles
All of the following are advantages of the average rate of return EXCEPT
it uses present values.
Unit variable costs may be affected by all of the following EXCEPT changes in the
level of activity.
In a lean manufacturing system,
workers typically identify better with the end product because of performing several functions.